Question

Direct Materials Variances

Bellingham Company produces a product that requires six standard pounds per unit. The standard price is $10.5 per pound. If 6,200 units used 37,900 pounds, which were purchased at $10.08 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$
b. Direct materials quantity variance	$
c. Direct materials cost variance	$

Direct Labor Variances

Bellingham Company produces a product that requires 10 standard direct labor hours per unit at a standard hourly rate of $19.00 per hour. If 6,400 units used 65,300 hours at an hourly rate of $18.05 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance	$
b. Direct labor time variance	$
c. Direct labor cost variance	$

Answer 1

• Question #1

[a] Direct Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                     10.50	-	$                    10.08	)	x	37900
	15918
	Variance		$            15,918.00			Favourable-F
[b] Direct Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	37200	-	37900	)	x	$                        10.50
	-7350
	Variance		$              7,350.00			Unfavourable-U
[c] Direct material Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$           390,600.00	-	$          382,032.00	)
	8568
	Variance		$              8,568.00			Favourable-F

• Question #2

[a] Direct Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     19.00	-	$                    18.05	)	x	65300
	62035
	Variance		$            62,035.00			Favourable-F
[b] Direct Labour Time Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	64000	-	65300	)	x	$                        19.00
	-24700
	Variance		$            24,700.00			Unfavourable-U
[c] Direct Labor Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$       1,216,000.00	-	$      1,178,665.00	)
	37335
	Variance		$            37,335.00			Favourable-F